Tyrion Company sells motorcycle helmets. In 2021, Tyrion sold 4,000,000 helmets before discovering a significant defect in their construction. By December 31, 2021, two lawsuits had been filed against Tyrion. The first lawsuit, which Tyrion has little chance of winning is expected to be settled out of court for P1,500,000 in January 2022. Tyrion's attorneys think the entity has a 50-50 chance of winning the second lawsuit, which is for P1,000,000. What is the accrued liability on December 31, 2021 as a result of the lawsuits?

Tyrion Company sells motorcycle helmets. In 2021, Tyrion sold 4,000,000 helmets before discovering a significant defect in their construction. By December 31, 2021, two lawsuits had been filed against Tyrion. The first lawsuit, which Tyrion has little chance of winning is expected to be settled out of court for P1,500,000 in January 2022. Tyrion's attorneys think the entity has a 50-50 chance of winning the second lawsuit, which is for P1,000,000. What is the accrued liability on December 31, 2021 as a result of the lawsuits?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6MC

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